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American businessman Jack Woods (Randy Quaid) takes a vacation and rents a cottage on the enchanted Emerald Isle which is occupied by a family of leprechauns.
Leprechaun Seamus Muldoon (Colm Meaney) and his son crash the fairies' costume ball and Muldoon's son falls in love with fairy Princess Jessica (Caroline Carver).
However their love re-ignites a feud between the leprechauns and the fairies, which escalates into a terrible war.
The Grand Banshee (Whoopi Goldberg) warns of the terrible consequences and Jack Woods is chosen to make the peace between the two species.
Woods interrupts his own romance with an Irish beauty to help, and becomes involved in a strange and wonderful magical adventure.